Telecommunications company Exetel has agreed to compensate consumers affected by changes made to its fixed term residential broadband plans, after concerns were raised by the Australian Competition and Consumer Commission.
In mid-2015, Exetel wrote to more than 2,000 residential broadband customers on 12-month fixed term plans, informing them that they were required to either change their broadband plan or terminate their Exetel service without penalty. Exetel relied on a clause in its standard residential broadband agreement which provided that Exetel could vary any part of that agreement for any reason.
Following an investigation, the ACCC considered that the clause was an unfair contract term which was likely to contravene the Australian Consumer Law (ACL). The ACCC also considered that Exetel’s advertising of these fixed term plans was likely to be misleading because it represented that consumers would receive the service for the 12-month fixed term, when this was not necessarily the case.
Exetel cooperated with the ACCC’s investigation and, in response to the ACCC’s concerns, agreed to:
- remove the clause from its residential broadband standard form of agreement;
- refund any additional monthly subscription costs incurred for the remainder of the fixed term by customers who changed to a new plan; and
- refund any activation charge previously paid by customers who terminated their Exetel service rather than change to a new plan.
“The Australian Consumer Law provides that unfair contract terms in standard form consumer contracts are void,” ACCC Acting Chair Dr Michael Schaper said.
“The ACCC considers that contract terms which allow a supplier to unilaterally vary the agreement for any reason are likely to be unfair. The ACCC will also be writing to other telecommunications providers with similar outdated terms in their consumer agreements, to put them on notice of the ACCC’s concerns and encourage them to review and update their standard agreements,” Dr Schaper said.
“Telecommunications companies should also be mindful that from November 2016, the law will also protect small businesses from unfair terms in standard form contracts.”
Representations made in advertising about the benefits available to consumers under standard form supply agreements, and which contain a term allowing the supplier to vary the contract for any reason, have the potential to mislead consumers about the benefits offered and their rights under the contract. False or misleading representations about the existence, exclusion or effect of any condition or right are prohibited by the ACL, and can attract a penalty of up to $1.1 million for each contravention.